Former adviser cops 20-year prison sentence

A former financial adviser in the US will spend the next 20 years behind bars after defrauding retiree investors of $30 million, some of which was used to fund religious ceremonies to ward off federal investigators.

Dawn Bennett of Maryland was this week sentenced to 20 years in federal prison for her conviction on 17 charges relating to a $29.3 million (US$20 million) Ponzi scheme.

In October 2018, Bennett was found guilty of conspiracy, securities fraud, wire fraud, bank fraud and making false statements on a loan application.

According to trial testimony, Bennett defrauded 46 retiree investors of their life savings between December 2014 and April 2017. They believed they were investing in an online retailer of luxury sportswear and would receive an annual interest rate of 15% via convertible or promissory notes.

Some of the money was used to pay earlier investors with funds received from new investors. The rest of the money was used for personal benefit, funding Bennett's lavish lifestyle.

Among other things, Bennett used the money to pay a website operator to arrange for priests in India to perform religious ceremonies to ward off federal investigators, purchase astrological gems, pay personal legal expenses and undergo cosmetic procedures.

To induce investors, Bennett lied about the risks of investing in her company, how investor funds would be used, and that the loans were liquid and guaranteed by the company and Bennett herself.

Bennett hosted a popular radio show, which many of the investors knew her from, and was named on the Barron's list of top financial advisers three times.

Bennett's company, DJB Holdings, also obtained a line of credit to the tune of $1.1 million (US$750,000) in May 2015. In doing so, Bennett claimed to have a brokerage account with a net portfolio value of over $5.8 million (US$4 million). In reality that account was worth $51 (US$35).

She then used the loan to pay off investors and her own personal expenses. When the loan defaulted in February 2016, Bennett claimed to be unaware of the default as she had been in China for the preceding eight months. However, investigators found no record of international travel at that time.

In addition to the 20-year sentence, Bennett was ordered to pay restitution amounting to $21.3 million (US$14.5 million) and a penalty of $21 million (US$14.3 million).

Once her jail term is complete, she will spend a further five years on supervised release.

"Dawn Bennett knowingly defrauded retirees of their life's savings - most of which she used for her own personal benefit," US Attorney Robert K. Hur said.

"She's been held accountable for her lies and theft and will now spend years in federal prison."

Her co-defendant, Bradley Mascho, pleaded guilty to conspiracy to commit securities fraud and to making a false statement. Mascho is scheduled to be sentenced later this month and faces a maximum of 10 years in prison.

Read more: Dawn BennettBradley MaschoRobert K. HurDJB Holdings
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